Tarver v. Godsey

WALKER, Chief Justice. On April 29, 1931, Frank W. Godsey and wife conveyed to Tarver Lumber Company lots 8 and 24 of' the Pin Oaks addition to the city of Beaumont; “in consideration of the sum of Ten ($10.00) Dol- • lars, and the exchange of property”; in fact, the consideration paid by Tarver Lumber Company for these lots was a note in, the sum of $1,037.13, payable in monthly installments of $15.15, with interest at the rate of 8.4 per cent, per annum, executed by J. T. Oglesbee and wife, which was secured by a second lien against lot No. 8, block No. 24 of the North addition to the city of Beaumont, and a sufficient additional consideration to cover the balance of the purchase price of lots 8 and 24; the $10 cash consideration recited in the deed was not paid. The Oglesbee note was assigned to Frank W. Godsey by Tarver Lumber Company by the following indorsement in writing on the back of the note, “Pay to the order of Frank W. Godsey,” signed by Tarver. Lumber Company. Oglesbee and wife regularly paid Godsey the monthly installments on their note, as per its terms, until the principal was reduced to $917.14, when they defaulted and failed and re-fxised, though requested, to make further payments. Under the option given him in the note, Godsey declared all future installments due and payable. The value of lot No. 8, block No. 24, North addition [1032] was exhausted by the payment of the first lien, and nothing- of its value was left to apply upon the second lien note, held by Godsey against Oglesbee and wife. After Oglesbee and wife defaulted, Godsey made demand upon Tarver Lumber Company, as indorser, for payment of balance due on the note, which was refused. At the time of their default, Oglesbee and wife were and have remained notoriously insolvent. For a valuable consideration, Tarver Lumber Company conveyed lot No. 8 of Pin Oaks addition to a third party, who had no notice of the nature of the consideration paid for it and lot No. 24. Afterwards, Tarver Lumber Company conveyed lot No. 24, Pin Oaks addition, to its president, William Tarver, who acquired it with knowledge of all attending facts; after acquiring this lot, William Tarver made valuable improvements thereon. The deed from Godsey and wife to Tarver Lumber Company, referred to above, did not retain a vendor’s lien against lots 8 and 24 to secure the payment of any part of the purchase price on lots 8 and 24 of the Pin Oaks addition; the deed merely recited a consideration cash in hand paid and purported to convey the absolute title to Tarver Lumber Company. This suit was brought by Frank W. Godsey against Tarver Lumber Company and appellant, William Tarver, to cancel his deed to Tarver Lumber Company and the deed from Tarver Lumber Company to William Tarver, purporting to convey a chain of title into William Tarver, on the ground of failure of' consideration, and, in the alternative, to recover against Tarver Lumber Company upon its written indorsement on the Oglesbee note. On trial to the court without a jury, judgment was entered against both Tarver Lumber Company and William Tarver, in effect, reinvesting title to lot No. 24, Pin Oaks addition, in Godsey, and transferring back to Tarver Lumber Company the Oglesbee note. Only William Tarver has appealed from that order. We sustain William Tarver’s assignment that the court erred in canceling the deeds by which he held title to lot No. 24, Pin Oaks addition. There was no allegation of fraud, accident, or mistake in the transaction between Godsey and Tar-ver Lumber Company, nor was there any evidence to that effect. The evidence was. that the Oglesbee note was reasonably worth its face value at the time it was indorsed and transferred to Godsey; that he investigated the value of this note before accepting it in part payment of his lots. On this statement of the facts, the action of failure of consideration was not available to Godsey. That the Oglesbee note constituted a valuable consideration at the time of the transaction cannot be questioned; that it subsequently became worthless, except for the indorsement of Tarver Lumber Company, was immaterial. The law of these facts is thus stated by 13 C. J. 369: “Subsequent Depreciation in Value. If there is consideration, the fact that it subsequently diminishes in value or becomes of no value at all cannot relieve the promisor from liability on his promise, as when a note sold afterward becomes of no value.” On the issue of liability of Tarver Lumber Company on its indorsement' of the Oglesbee note to Godsey, the trial court, by its conclusions of fact, found that this note was “indorsed by the Tarver Lumber Company for value.” The in-dorsement did not restrict the liability of Tarver Lumber Company, nor was it ambiguous. There is no contention that it was made through accident, fraud, or mistake. It follows that, under this, indorsement, on the facts found by the court, Tarver Lumber Company was liable to Godsey for the' unpaid balance of the note, principal, interest, and attorney’s fees. Windham v. Creech (Tex. Civ. App.) 79 S.W.(2d) 631; Behrens v. Kirkgard (Tex. Civ. App.) 143 S. W. 698; article 5936, R. S. 1925, § 66, Negotiable Instruments Act. The judgment of the lower court, canceling the deeds into William Tarver, is reversed and judgment here rendered, vesting him with title to the lot in controversy, and in his favor against Godsey for all costs in this behalf expended; judgment is here rendered in favor of God-sey against Tarver Lumber Company for the unpaid balance of the Oglesbee note, principal, interest, and attorney’s fees, together with all costs incident thereto. It appearing that it would be equitable to tax half of all costs incurred in this cause against Godsey and the other half against Tarver Lumber Company, it is so ordered. Reversed and rendered.